Aug. 12 (Bloomberg) -- South Korea’s won rose to the
highest level this month as optimism that tension between Russia
and Ukraine is abating supported demand for riskier assets.

The Kospi index advanced as overseas investors bought more
local equities than they sold for the first time in four days,
exchange data show. President Vladimir Putin urged Ukraine to
halt fighting in the nation’s east, while the Red Cross said it
is working on sending aid to rebel-held areas. The Bank of Korea
will probably cut interest rates for the first time since May
2013 at its Aug. 14 meeting, according to 14 of 16 economists
surveyed by Bloomberg. Two expect no change.

“Market sentiment has shifted to risk-on as geopolitical
risks are showing signs of easing, as can be seen in the Kospi
gains,” said Jeon Seung Ji, a Seoul-based currency analyst at
Samsung Futures Inc. “Exporters selling the greenback and
investors unwinding long dollar positions also contributed to
won gains.” A long position is a bet an asset will rise in
value.

The won strengthened 0.4 percent to 1,026.60 per dollar at
the close in Seoul, according to data compiled by Bloomberg. The
currency touched 1,026.05 earlier, the strongest level since
July 31. One-month implied volatility, a gauge of expected
swings in the exchange rate used to price options, fell nine
basis points to 6.85 percent.

The yield on the 2.75 percent government bonds due June
2017 rose one basis point to 2.52 percent, Korea Exchange Inc.
prices show. The yield on the 3.5 percent securities maturing in
March 2024 increased two basis points, or 0.02 percentage point,
to 3.06 percent.